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Friday 12 September 2014
Friday 12 September 2014
Friday 12 September 2014
Friday 12 September 2014
A Guide for UK Financial Customers
While the Financial Services Authority (FSA) might have become a familiar name, it is now no more. As of April 2013, regulation of the financial services industry was divided between the Prudential Regulatory Authority (PRA) and Financial Conduct Authority (FCA). The Bank of England also gained direct supervision of the entire banking system through its powerful Financial Policy Committee (FPC), which can instruct the two new regulators.
The Financial Ombudsman Service (FOS) still exists and carries on in its existing role.
What Does This Mean for Me as a Customer?
In practical terms, the FPC and PRA will have little direct influence on the experience of those who buy financial products. The FPC monitors the overall health of the financial services sector and regulates it as required, while the PRA oversees the stability of major banks and insurance companies, intervening when necessary to ensure prudent management.
The FCA, on the other hand, has a more direct impact on consumers. It is responsible for promoting effective competition, ensuring relevant markets function well, and regulating the conduct of all financial services firms. This includes preventing market abuse and ensuring consumers get a fair deal from financial firms. The FCA also supervises the prudential regulation of financial firms not overseen by the PRA, such as asset managers and independent financial advisers. Meanwhile, the FOS acts as a mediator between financial institutions and their customers.
What Exactly is the Difference Between the FCA and the FOS?
The FCA oversees how institutions manage customer service and the strategies they use to sell their products. It may take action against an institution if there are general failings in its behaviour, but it leaves individual complaints to the FOS.
The FOS, established by parliament, adjudicates individual complaints that consumers and financial businesses can't resolve themselves. It is completely free for customers to use, and if the FOS finds in a customer's favour, the institution must comply with its decision. However, the FOS does not set rules for financial businesses or issue fines for breaches—that's the regulator's job. The FOS covers a broad range of financial institutions, from major high street banks to payday lenders and pawnbrokers.
How Does It Work Precisely?
The FOS only gets involved if the financial institution in question fails to resolve a dispute to a customer's satisfaction. Essentially, any complaint should first be directed to the institution, giving them the opportunity to investigate and resolve it. They have 8 weeks to do so. If the customer is still unsatisfied, they can escalate the complaint to the FOS.
Once the complaint is lodged, the FOS will gather all relevant information to reach a fair decision. Depending on the complexity of the case, this process can take from a few weeks to several months. While the FOS aims to be as quick as possible, it must also ensure fairness and thoroughness, as many complaints involve complex, unique circumstances.
Payment Protection Insurance (PPI) complaints are a typical example. Once the FOS has all the facts, it will make a decision and inform both parties in writing. If the FOS rules in favour of the customer, the institution must comply.
What Happens if My Complaint is Upheld?
If your complaint is upheld, the FOS will seek to relieve you of the impact of the institution's failings by awarding appropriate compensation. This could involve ordering an insurer to honour a claim or a lender to refund the cost of a mis-sold product. It is rare for the FOS to award compensation for inconvenience or distress, but when it does, the amounts typically range between £200 and £1,000.
While the FOS can order financial institutions to compensate customers, only the FCA has the authority to levy fines or impose penalties. The FOS’s role is purely as an arbitrator, while regulation is handled separately by the FCA and PRA.
A Guide for UK Financial Customers
While the Financial Services Authority (FSA) might have become a familiar name, it is now no more. As of April 2013, regulation of the financial services industry was divided between the Prudential Regulatory Authority (PRA) and Financial Conduct Authority (FCA). The Bank of England also gained direct supervision of the entire banking system through its powerful Financial Policy Committee (FPC), which can instruct the two new regulators.
The Financial Ombudsman Service (FOS) still exists and carries on in its existing role.
What Does This Mean for Me as a Customer?
In practical terms, the FPC and PRA will have little direct influence on the experience of those who buy financial products. The FPC monitors the overall health of the financial services sector and regulates it as required, while the PRA oversees the stability of major banks and insurance companies, intervening when necessary to ensure prudent management.
The FCA, on the other hand, has a more direct impact on consumers. It is responsible for promoting effective competition, ensuring relevant markets function well, and regulating the conduct of all financial services firms. This includes preventing market abuse and ensuring consumers get a fair deal from financial firms. The FCA also supervises the prudential regulation of financial firms not overseen by the PRA, such as asset managers and independent financial advisers. Meanwhile, the FOS acts as a mediator between financial institutions and their customers.
What Exactly is the Difference Between the FCA and the FOS?
The FCA oversees how institutions manage customer service and the strategies they use to sell their products. It may take action against an institution if there are general failings in its behaviour, but it leaves individual complaints to the FOS.
The FOS, established by parliament, adjudicates individual complaints that consumers and financial businesses can't resolve themselves. It is completely free for customers to use, and if the FOS finds in a customer's favour, the institution must comply with its decision. However, the FOS does not set rules for financial businesses or issue fines for breaches—that's the regulator's job. The FOS covers a broad range of financial institutions, from major high street banks to payday lenders and pawnbrokers.
How Does It Work Precisely?
The FOS only gets involved if the financial institution in question fails to resolve a dispute to a customer's satisfaction. Essentially, any complaint should first be directed to the institution, giving them the opportunity to investigate and resolve it. They have 8 weeks to do so. If the customer is still unsatisfied, they can escalate the complaint to the FOS.
Once the complaint is lodged, the FOS will gather all relevant information to reach a fair decision. Depending on the complexity of the case, this process can take from a few weeks to several months. While the FOS aims to be as quick as possible, it must also ensure fairness and thoroughness, as many complaints involve complex, unique circumstances.
Payment Protection Insurance (PPI) complaints are a typical example. Once the FOS has all the facts, it will make a decision and inform both parties in writing. If the FOS rules in favour of the customer, the institution must comply.
What Happens if My Complaint is Upheld?
If your complaint is upheld, the FOS will seek to relieve you of the impact of the institution's failings by awarding appropriate compensation. This could involve ordering an insurer to honour a claim or a lender to refund the cost of a mis-sold product. It is rare for the FOS to award compensation for inconvenience or distress, but when it does, the amounts typically range between £200 and £1,000.
While the FOS can order financial institutions to compensate customers, only the FCA has the authority to levy fines or impose penalties. The FOS’s role is purely as an arbitrator, while regulation is handled separately by the FCA and PRA.
